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MonthNovember 2018

Madam Wang Xiaopu is an investor from China. Convinced that Singapore’s medical aesthetics industry is a gold mine, she signed a contract to buy over 20,000 shares in a company holding a chain of aesthetic clinics for $32.5 million. She was informed by Dr Goh, a major shareholder in the company, that the clinics have a pre-tax profit of $10 million in 2012, and its pre-tax profit was also growing at a rate of more than 30 per cent a year. The chain, which originally had 14 branches, is now facing insolvency, rendering Madam Wang’s shares worthless.

Madam Wang is just one of many faceless (clueless) foreign investors wooed into the seemingly lucrative local healthcare industry. With millions injected into their war chests, the aggressive clinic management teams spawn dozens of branches, quickly saturating the small local market and creating the illusion of insufficient manpower. I’ve already written about the apparent shortage of dentists which is not due to dentists unable to meet the demand of patients but rather them not meeting the demand from the sheer number of “shell” clinics built. And the drying wells are seen everywhere. Small clinics which used to be doing very well have deregistered themselves from GST. Some have seen a 30-50% drop in revenue. On the ground, clinicians bonded to “high performance” practices are struggling to hit targets and this sometimes results in overwork, over-treatment or even cases of fraudulent claims of which we have seen and will see a lot in the coming months and years.

It is unfortunate that most of those in the know hesitate to comment on this issue before the profession/industry reached this state. They are reticent for a variety of reasons. Some keep quiet because they are in the game themselves. Some are afraid of saying the “wrong” thing. Some simply just don’t want to get “marked”. Why speak out when they are still earning a comfortable income? A doctor who commented on my Facebook posting on this subject quickly changed his mind and removed his comments. That’s how fearful Singaporeans are, even when they need to sound the alarm for a house on fire. Instead of voicing out their concerns, some quietly crawl through loopholes to sustain their income. But for how long can all this last without blowing up in our faces?

As Singapore opens its doors to high net worth new citizens, it’s worthwhile to keep an eye on the industries they invest in. What is the demand for high value medical services which are readily available for a lower price tag and with fewer restrictions/regulations in the region? When profits and ROIs fall far short of investor expectations, the scene will turn really ugly.